- Decision
- Lower
- Rate change
- 75 bps
- central bank rate
- 10%
The Monetary Policy Committee of the Central Bank of Kenya on 8 April 2025 cut the Central Bank Rate by 75 bp to 10.00 percent, judging that subdued headline inflation—3.6 percent in March versus 3.5 percent in February, well below the 5 ± 2.5 percent target midpoint—and still-weak private-sector credit growth left room to stimulate activity without jeopardising exchange-rate stability. The move builds on February’s 50 bp reduction from 11.25 percent. To reinforce transmission the MPC halved the policy corridor to ±75 bp around the CBR and lowered the Discount Window rate to the corridor’s new upper bound. GDP growth eased to an estimated 4.6 percent in 2024 from 5.6 percent in 2023 but leading indicators signal a pick-up, with 2025 output seen expanding by 5.4 percent; private-sector credit inched up 0.2 percent y/y in March after earlier contraction, while average lending rates fell to 15.8 percent. Externally, the current-account deficit narrowed to 3.1 percent of GDP in the 12 months to February and reserves stand at USD 9.93 bn (4.44 months of import cover), providing a buffer amid ongoing trade and geopolitical tensions and uncertain global inflation prospects. The committee reiterated that it will monitor domestic and global conditions and stands ready to act, with its next meeting scheduled for June 2025.
Rate evolution
From June 2025 to February 2026, the Central Bank of Kenya cut the Central Bank Rate by a cumulative 125 basis points to 8.75 percent from 10.00 percent in an uninterrupted easing cycle. The Monetary Policy Committee repeatedly judged there was scope to ease because inflation remained below the midpoint of the 5±2.5 percent target range and was expected to stay there in the near term, allowing it to support lending and economic activity while keeping inflation expectations firmly anchored and the exchange rate stable. Decisions were also backed by resilient growth, falling lending rates, a steady recovery in private sector credit, adequate foreign exchange reserves and a stable banking sector, even as surveys continued to cite subdued consumer demand and high business costs. The Committee cut the CBR to 9.00 percent in December and 8.75 percent in February as inflation stayed contained and credit strengthened, while flagging food-price pressures, adverse weather, trade-policy uncertainty and geopolitical tensions.
On August 11, 2026, the Committee held the CBR at 8.75 percent, judging the stance appropriate to keep inflation expectations anchored within the target range and the exchange rate stable. Overall inflation was broadly stable at 6.5 percent in July and was expected to remain within the target range in the near term, while the Committee noted stronger economic growth and private sector credit but said it would monitor global oil prices, potential second-round effects on inflation and other global and domestic developments.